When a new Chief Executive takes over a public company it has become common practice that he writes off as much of the past that is possible to do so. There is good reason for this: it causes the share price to fall prior to his options being granted.
Jim Mullen, the new CEO at Ladbrokes, was true to the form book in the 2015 interim results when he wrote off some past software investment amongst other things, bringing the total write off to £85 million.
GBGC UK bookmakers licence holders
There is good reason to expect that even this figure is overstated because some companies licence their subsidiaries individually.
GBGC, therefore, estimates that in mid-2015 there are only 200 bookmakers now trading from betting shops in the UK.
Betting has been under pressure for quite a few years now. There have been more television programmes on “addictive gambling”. The most recent BBC series Britain at the Bookies was perhaps more balanced than most but nevertheless still spent an episode highlighting the behaviour of those with addictive gambling problems.
Drinkaware and the Portman Group have been leading the call for responsible drinking since 2006. They have had a great deal of success. Alcohol consumption since 2006 is down 16%.
GBGC UK Alcohol consumption
Portman Group polled people to find out why. Forty six (46%) percent said it was part of a healthier lifestyle followed by thirty three (33%) percent citing changing social norms making binge drinking socially unacceptable.
The key here is to understand what is going on. The Government does not like its citizens to drink too much alcohol; it ends up being a cost to the NHS, just like smoking. Incidentally, the prevalence of smoking is now down to nineteen (19%) percent from forty five (45%) percent in 1974 following outright bans in public places, taxation, and the fear of getting cancer.
The betting industry has seen the tax rises and the bad publicity, and has volunteered the final strand, oversight by Senet Group, in response. Shops now display signs in the window telling people not to bet. There is a very good campaign on television persuading you not to bet if it isn’t “fun” anymore. A whole week was devoted to Gamble Aware week where bookmakers put signs in their front windows to tell people how to gamble responsibly, something akin to treating your customers like children.
If gambling is on the Government’s radar to be curtailed and it goes the same way as drink and tobacco many more betting shops will close. Embrace social responsibility, if you will, on the basis that you may consider it a good cause but do not expect to be financially rewarded because of it. For every one percent (1%) fall in revenue expect a four percent (4%) drop in net profits.
by Warwick Bartlett